A plugin is a part of the core 3 Joomla extensions (Components, Modules and Plugins) and is used to add extra functionality into a component or plugin. For example it might add an extra form into a component (like the Profile Plugin), add shortcuts in for urls or other code (like a BBCode Parser) or even give more advanced functionality like provide an extra authentication method (like the ability to login with Facebook Login)
To install a plugin please read installing an extension in Joomla!.
Many plugins have parameters that allows you to customise their functionality without having to edit any code. We'll investigate some of these features. Navigate to the plugin manager by going to "Extensions" in the menu in the backend of Joomla. Then click on "Plugin Manager". You will now see a list of all plugins available on your site. To see the full information on what you can do on this screen click on the "Help" button.
In this case we will visit the "Content - Page Navigation" plugin. This particular plugin will allow you to add a Table of Contents (TOC) format to articles created in the content component if desired. By clicking on basic options you can see there are two parameters for this plugin. One chooses whether the 'contents' table is displayed above or below the main body of text, whilst the second lets you choose whether the position is above the title and other information for the article (Full Display) just above the start of the main body of text (Text).
Here all we have is two simple dropdown selections. Which we can select and then press "Save" in the toolbar to save the configuration
For a full list of plugins and their available parameters see the Help Screen Documentation by going into the edit view of a plugin and clicking on the "Help" button.